Latest News and Analysis
Deals and Transactions
Track Drilling (Rigs by operator) | Completions (Frac Spreads)

Drilling & Completions | Reserves | Drilling Activity

Gran Tierra Details Year-End 2020 Reserves, Ops Update

emailEmail    |    printPrint    |    bookmarkBookmark
   |    Wednesday,January 27,2021

Gran Tierra Energy Inc. reported its year-end 2020 reserve update.

Commenting on Gran Tierra's 2020 year-end reserves, operational update and future plans, Gary Guidry, President and Chief Executive Officer of Gran Tierra, said: "Our teams in Colombia, Ecuador and Canada rose to meet the many challenges of 2020 through their diligent management of COVID-19 safety protocols and sharp focus on maintaining and increasing the value of our assets. As a result, we are pleased to announce significant reserve additions in both the PDP and 1P categories, despite our large reductions in capital investment during 2020. This achievement demonstrates that the Company's core conventional oil assets continue to show positive waterflood responses and low base decline rates.

The advancement of our waterflooding efforts in the Acordionero, Costayaco and Moqueta oil fields has clearly allowed Gran Tierra to continue to convert Probable and Possible reserves into the Proved reserves categories. Even though we decided during 2020 to reduce capital spending, we believe the Company's excellent performance in terms of PDP and 1P reserves additions is a testament to the quality of our assets.

With our strategy, we believe Gran Tierra is well-positioned for the resumption of prudent growth in 2021 and strong potential free cash flow1 generation. We have already increased production approximately 24% from our third quarter 2020 average, which we believe reflects the strength of our Proved reserves. Our 2021 capital budget of $130 to $150 million is a balanced, returns-focused program which prioritizes free cash flow generation over the rate of development, exploration and production growth, with investment primarily directed to the Acordionero and Costayaco oil fields. With a keen focus on further strengthening our balance sheet, we plan to direct free cash flow to ongoing debt reduction in 2021 and beyond.

During fourth quarter 2020, Gran Tierra resumed development activities throughout our portfolio, including the ongoing well workover operations and the restart of development drilling at Acordionero. We also restarted workover operations at Costayaco and look forward to a planned initiation of development drilling in that field during second quarter 2021. We forecast 2021 average production of 28,000 to 30,000 bopd for the Company.

Our 2021 plans are fully aligned with Gran Tierra's "Beyond Compliance Policy" which focuses on our commitments to environmental, social and governance ("ESG") excellence. Gran Tierra looks for significant opportunities and benefits to the environment and communities by voluntarily and proactively taking steps to protect the environment and provide social benefits because it is the right thing to do. In 2020, we also had our best safety year in the history of the Company.

We believe that Gran Tierra successfully navigated the exceptional challenges of 2020 and are excited to return to an economically sound growth trajectory in 2021 and beyond, with a focus on free cash flow generation and debt reduction."

2020 Year-End Reserves and Values

    Net Present Value at 10% Discount ("NPV10") Net Asset Value ("NAV") Per Share at 10% Discount
Reserves Reserves Before Tax After Tax Before Tax After Tax
Category MMBOE $ million $ million $/share2,4 $/share3,4
1P 79 1,191 1,029 1.15 0.71
2P 133 1,962 1,590 3.25 2.23
3P 174 2,612 2,045 5.02 3.47

2020 Summary

  • Material PDP and 1P reserves additions, in particular at Acordionero, Costayaco and Moqueta, as a result of ongoing successful waterflooding operations
  • PDP reserves replacement of 133% with PDP reserves additions of 11.0 MMBOE
  • 1P reserves replacement of 100% with 1P reserves additions of 8.3 MMBOE
  • Finding and development costs ("F&D") including future development costs ("FDC") of $5.06/boe on a PDP basis and $2.65/boe on a 1P basis
  • F&D recycle ratios including FDC of 3.5 times (PDP) and 6.7 times (1P)
  • Significant reserves additions at Acordionero: 7.1 MMBOE (PDP) and 2.6 MMBOE (1P)
  • Despite a material reduction in the McDaniel's forecast oil price assumptions relative to one year ago (the average Brent oil price over the next 5 years in the GTE McDaniel Reserves Report is $54.04/bbl):
    • Gran Tierra's 2020 year-end 1P NPV10 after tax decreased only 21% compared to 2019 year-end
    • This performance was achieved in part due to large reductions in forecast operating costs based on the actual savings achieved by the Company in 2020
    • As of December 31, 2020, McDaniel estimates that Gran Tierra's total 1P undiscounted operating costs over the remaining life of the Company's fields are approximately 26% less than the McDaniel estimate as of December 31, 2019*
  • Acordionero, Costayaco, Moqueta and Suroriente now represent 83% of Gran Tierra's 1P reserves and 78% of 2P reserves
  • PDP reserves account for 55% of 1P reserves and 1P reserves account for 59% of 2P reserves, demonstrating the strength of the Company's reserves base and the potential future conversion of Probable reserves into 1P reserves and Proved Undeveloped reserves into PDP reserves
  • Gran Tierra's mature waterflood assets, Costayaco and Moqueta, continued to grow and deliver value, with total reserves additions of 3.8 MMBOE (PDP) and 5.5 MMBOE (1P)
  • FDC are forecast to be $312 million for 1P reserves and $565 million for 2P reserves
  • Realized a 39% increase in 2P reserve life index to 17 years and a 51% increase in 1P reserve life index to 10 years

Operational Update

  • 2020 Safety
    • Gran Tierra's teams are proud of their excellent safety performance during the many challenges of 2020, including the proactive implementation of COVID-19 protocols that enabled continuity of the Company's operations
    • The Company achieved its first year with a Lost Time Incident Frequency of zero, during which the Company logged close to 4 million man-hours
    • The Company's Total Recordable Case Frequency decreased 33% compared with 2019, falling to a rate of 0.08 cases per 1 million man-hours versus 0.12 cases per 1 million man-hours in 2019
  • Average Production
    • 2020: 22,624 bopd
    • Third quarter 2020: 18,944 bopd
    • Fourth quarter 2020: 21,907 bopd
    • During January 1-25, 2021: 23,428 bopd
  • Closing of Sale of PetroTal Shares
    • As previously announced, Gran Tierra Resources Limited ("GTRL"), a wholly owned subsidiary of Gran Tierra, sold an aggregate of 109,006,250 common shares of PetroTal Corp. ("PetroTal") for an aggregate purchase price of approximately $15 million
    • As of market close on January 26, 2021, the remaining 137,093,750 shares of PetroTal owned by GTRL had a market value of approximately $26 million
  • Acordionero Oil Field
    • Gran Tierra continues to workover offline oil wells to restore them to production with two workover rigs
    • As of January 25, 2021, approximately 3,500 bopd of production has been restored as a result of this workover program
    • The Company restarted development drilling at Acordionero on November 30, 2020 and has since drilled the AC-64 and AC-65 oil wells and the AC-66i water injection well in fourth quarter 2020, and the AC-67i water injection well in early January 2021; the team is currently performing open hole logging operations on the AC-68 oil well
    • The AC-64 and AC-65 oil wells were brought on production ahead of schedule in late December 2020
    • The drilling rig is forecast to continue drilling new development wells at Acordionero throughout 2021; there are 5 oil wells remaining to be drilled from the new southwest pad, which are expected to be finished by the end of first quarter 2021, prior to moving the rig to the next pad to drill 5 additional oil wells, for a total of 10 new oil wells
  • Costayaco Oil Field
    • Gran Tierra initiated workover operations in late November 2020 and completed 3 workovers during fourth quarter 2020; the workover rig remains active with 5 jobs planned to be completed prior to the end of first quarter 2021
    • Efforts are underway to restart development drilling during early second quarter 2021, with a 3 well program; the rig is currently stacked on location over the planned CYC-42 infill oil well location
  • Personnel Announcement
    • Effective immediately, Tony Berthelet, Chief Operating Officer, is no longer with Gran Tierra

Related Categories :


More    Reserves News

South America News >>>